Page 1085 – RTO Insider

June 19, 2020March 11, 2025

More Transparency Ordered on PJM ‘Immediate Need’ Tx

PJM has failed to comply with FERC’s conditions for exempting “immediate need” transmission projects from competition under Order 1000 and must increase the transparency of its practices, the commission ruled Thursday (EL19-91).

Separately, the commission terminated Section 206 investigations into ISO-NE (EL19-90) and SPP (EL19-92), concluding they were in compliance with the exemption rules.

FERC opened investigations into the three RTOs’ practices in October 2018, questioning whether they were thwarting Order 1000’s competition mandate by abusing the immediate need exemption. (See FERC to Probe Order 1000 Competition Exemptions.)

Order 1000 required RTOs to eliminate any federal right of first refusal (ROFR) from commission-jurisdictional tariffs and agreements but allowed a ROFR for reliability projects whose needs are so urgent that there is insufficient time to hold a competitive proposal window.

Five Criteria

Saying the exemption should be used only in “certain limited circumstances,” the commission set five criteria to limit the RTOs’ discretion for applying it.

In Thursday’s order, FERC concluded PJM was complying with only two of the criteria, ordering it to make Operating Agreement changes regarding the other three within 60 days.

The commission said PJM complied with the first criterion that projects exempted from competition must be needed in three years or less to solve reliability criteria violations. PJM also complied with a requirement to post annually a list of immediate need reliability projects to be built by incumbent transmission owners.

But FERC said it agreed with stakeholders’ comments that PJM’s explanations “do not provide sufficient detail” of the reliability violations and system conditions for which there are time-sensitive needs. “Similarly, we find that PJM generally fails to include any discussion about system conditions related to the reliability violations in its TEAC [Transmission Expansion Advisory Committee] presentation materials. For example, we find one-line labels (e.g., ‘short circuit,’ ‘end-of-life,’ ‘overstressed’) identifying the reliability violation driving the immediate need reliability project insufficient to comply.”

FERC said it was not requiring “an exhaustive description” but said PJM “may provide details regarding the specifics of the violation; why the violation arose; when it first occurred; the implications of the violation in terms of generation, load, congestion, etc.; the severity of the problem; and expectations for the violation’s severity in the future (i.e., will the problem get worse or have a cascading effect at a later point in time).”

The commission also cited PJM for failing to post a “full and supported written description” on any decision to award a project to an incumbent transmission owner, including an explanation of other transmission or non-transmission options that the RTO considered and the cause of the need and why it was not identified earlier.

‘Little Insight’

“The TEAC presentation materials provide little insight as to PJM’s reasoning,” the commission said. ” … In addition, we find that PJM does not provide in its presentation materials an explanation for its determination that there was insufficient time to open a full or shortened proposal window.”

Going forward, FERC said, PJM must “expound on its description to support the designation of its immediate need reliability projects, specifically addressing the time-sensitive nature of the need, why the incumbent transmission owner was selected, alternatives considered and why the need was not identified earlier. … PJM could also explain the urgency of the violation and compare it to the typical timeline of a standard or shortened competitive proposal window, explaining how the proposal window would delay the solution further.”

Although its prior order did not specify how much time PJM should allow stakeholders to comment on project descriptions, FERC said the RTO’s practice of posting materials three days before meetings at which the projects are to be discussed “is not sufficient.” It noted that the RTO gives stakeholders 10 days to review materials for supplemental transmission projects under its Attachment M-3 process.

“As a result, we direct PJM to submit a compliance filing to designate a specific time period greater than three days for stakeholders to provide comments in response to the project description,” it said.

PJM also failed to provide transparency in addressing stakeholder questions about immediate need projects, FERC said, ordering the RTO to post on its website all stakeholder comments and PJM answers, “whether provided in writing or submitted verbally at TEAC meetings.”

The commission also said PJM must make it easier for stakeholders to locate information on immediate need projects, noting that the RTO has put such information in more than 60 locations on its website. “While we do not find that PJM must post all immediate need reliability project information to a single webpage to meet the transparency requirements … we direct PJM to post all information regarding immediate need reliability projects in a manner that is more easily accessible to stakeholders than the current approach.”

‘Reasonable Balance’

The commission rejected other requested relief, including LS Power’s request to eliminate the immediate need exemption and the New Jersey Board of Public Utilities’ request that the commission hold a technical conference to determine whether it should continue to allow other exemptions from competition such as those for lower voltage projects and substation equipment.

The commission noted PJM’s statement that it is working to reduce the use of immediate need designations by improving the efficacy of its five-year model. PJM said improved modeling and testing has already begun to reduce the use of immediate need designations. In 2019, PJM said that it reported only eight immediate need reliability projects — totaling 11 baseline upgrades.

| © RTO Insider

FERC also declined a request to shorten the three-year time threshold for immediate need projects, saying it “continues to strike a reasonable balance” between reliability and competition.

In addition, it rejected LS Power’s request to exclude “end-of-life” projects from the immediate need category. LS Power said EOL projects represent a large portion of immediate need designations.

The commission also refused LS Power’s request to require transmission owners to provide PJM with information on EOL projects seven years in advance and American Municipal Power’s call for more frequent and timely submission of information by TOs on load changes to aid system modeling.

“We make this determination because such a requirement is outside the scope of the proceeding. We expect that, as PJM has committed to do, PJM will continue to improve its processes, to both timely receive the relevant system information from transmission owners and timely incorporate this information into its planning models, to potentially reduce reliance on the immediate need reliability project exemption,” FERC said. (See related story, PJM Stakeholders Pass End-of-Life Proposal.)

SPP, ISO-NE Cleared

FERC terminated the Section 206 investigations into SPP and ISO-NE, saying they had not produced evidence that the RTOs were implementing the exemption “in a manner that is inconsistent with or more expansive than the commission directed.” It noted that no stakeholders had accused either RTO of violating their tariffs.

SPP said that it had designated only five transmission projects as “short-term reliability projects” out of 144 projects identified in its Integrated Transmission Planning studies since study year 2016.

The Public Utilities Regulatory Authority had argued that ISO-NE’s need-by dates are artificially early because the RTO performs its needs assessments under assumptions more conservative than those used by day-to-day operations. But FERC said ISO-NE had “sufficiently justified” its approach. The RTO explained that its operators do not have to respect certain contingencies if they don’t have impacts outside of the local area where they occur. It also said the operators have access to a wider range of equipment ratings and system operating conditions than are allowed in transmission planning.

Several New England state agencies, including the attorneys general for Massachusetts and Connecticut and the Maine Public Advocate, said FERC should find ISO-NE’s exemption unjust and unreasonable because the region was the only RTO that had not completed a competitive transmission procurement. “Although ISO-NE’s lack of a competitive solicitation was one reason the commission instituted this proceeding, this outcome is not a sufficient reason to find the relevant Tariff provisions unjust and unreasonable,” FERC said. (On June 8, the RTO announced that it would recommend a project by incumbent utilities National Grid and Eversource Energy as the lone finalist in its first competitive solicitation.)

The commission also rejected arguments regarding the efficiency of New England’s transmission spending, its accommodation of non-transmission solutions and its “reactive” planning process as beyond the scope of the proceeding.

June 19, 2020

Pandemic Operations Steady, MISO Members Report

MISO members say that work-from-home measures and social distancing mandates in workplaces aren’t generally impeding their pace of work, but they do miss the personal collaboration afforded by in-person meetings.

The RTO asked Advisory Committee members to discuss how the novel coronavirus has impacted their company operations during a June 17 teleconference.

“COVID has impacted every industry, every business around the world,” MISO Vice President of Strategy and Business Development Wayne Schug said in opening the discussion.

He asked stakeholders “what a path to normality” looks like for their companies, or if they could even return to complete normalcy.

“Once the stay-at-home orders were in effect, many of us found ourselves at home, probably taking way too many virtual meetings,” Schug said.

According to a MISO surv e y, only about 14% of member companies had had more than 25% of their workforce working remotely before the pandemic hit. Now, most MISO member companies have more than a quarter of their employees reporting from home.

“In large part, our projects are on schedule. There have been some delays to accommodate this new work environment,” Otter Tail Power’s Stacie Hebert said, referring to rescheduled public meetings and temporarily closed courthouses.

DTE Energy is returning employees to the field to resume maintenance work, the company’s Manager of Wholesale Power Markets Nick Griffin reported.

MISO pandemic — DTE Energy’s Nick Griffin | © *RTO Insider*

North Dakota Commissioner Julie Fedorchak said it was at first difficult to maintain the pace of the commission’s work remotely while still honoring open meeting requirements. However, state commissions now largely have the remote format down pat.

“I think commissions got to the point where they could do just about anything,” Fedorchak said, adding that her commission had already been laying the groundwork for more virtual meetings prior to the pandemic.

She said the commission was able to honor all biweekly regular meetings, as well as permitting and routing meetings, while many employees worked from home. She also said about 75% of commission staff have returned on-site.

When MISO Director Todd Raba asked what member companies do when employees come down with a COVID-19 infection, multiple members said their companies have yet to confront that situation. Griffin noted that cases among DTE Energy’s 11,000 employees jumped from about 50 to about 200 “after an isolated incident at one of our power plants.”

Audrey Penner said her fellow Manitoba Hydro employees would return to offices “not earlier than the end of the summer.”

Director Barbara Krumsiek asked how member companies are preparing for a possible second wave of infections in the fall.

Many companies are targeting a return to work at year’s end or spring of 2021, Griffin responded.

“I would expect more telecommuting practices even after the pandemic,” he said.

Missing Meetings

Schug asked how MISO members are faring under an entirely virtual stakeholder process.

LS Power’s Pat Hayes said an online stakeholder process has been working “rather well,” though connectivity during meetings sometimes lags. “Of course, you’re hearing some dogs bark and some family conversations in the background.”

Hayes also lamented an inability to directly interact with people at meetings and make personal connections. He wasn’t alone.

“It’s about getting to know people in the process. But it’s also about when you have a differing opinion, maybe meeting in the hallway to have a follow-up, asking clarifying questions, having a meeting of the minds,” Beth Soholt of Clean Grid Alliance added.

“It’s impossible to read body language,” said CMTC’s Kevin Murray about virtual meetings.

“A lot of the work that we do is based on in-person interaction,” noted Travis Stewart of Gabel Associates, who requested that MISO find a way to facilitate more spontaneous conversations.

“I dearly miss sitting around a table and the congeniality,” Penner said of quarterly MISO Board Weeks. “I’m looking forward to getting back into a room together.”

MISO has halted all in-person stakeholder meetings at its offices through the end of the year. Offsite meetings — such as Board Week — have also largely been converted to a virtual format, though RTO executives hold out hope that the December Board Week in Orlando may yet be spared. MISO has also begun allowing employees back on-site on a voluntary basis at its three office locations.

MISO also plans to hold virtual Nominating Committee meetings through November, where new MISO board candidates are vetted and selected for member voting.

Directors Theresa Wise and Baljit Dail will reach their term limits at the end of the year. Wise is eligible to serve another three-year term, while Dail has already exceeded his total three-term limit through a special waiver in 2017, which was granted to retain his IT expertise. (See “Committee Permits Consideration of Extra Term for Dail,” MISO Bo D Briefs: June 22, 2017.)

“We miss seeing you in the auditorium. We’re doing this virtually, but we’d much rather do it in person. As soon as it’s safe to do so, we’re going to resume these,” Board Chair Phyllis Currie said during the June 18 board meeting.

Difficult Times

Schug asked how companies are considering stressed-out ratepayers under the pressure-cooker combination of the pandemic’s economic fallout and social and racial justice protests in every state.

“There’s a lot of pressure on customers right now … manifesting in a lot of ways,” Public Consumer Advocates Sector Representative Christina Baker said. “… The economic effect is going to be around for years to come.”

She said “all customers — not 1% of customers” are experiencing stressors related to the pandemic and the push for societal change.

“For the customers it’s a much broader, longer, multilayered time for them,” Baker said.

Krumsiek agreed: “For the end-use customer, there’s no return to normal. Our vulnerable populations for COVID run along the same lines as those affected by racial injustice.”

Schug asked if MISO members anticipate a slowdown in the political push for renewables and carbon reductions given the political and social turmoil.

“I don’t anticipate a reduction in demand for renewable energy because of the pandemic. I really don’t,” Fedorchak said.

Soholt also expects carbon reduction goals to continue as planned.

“I think our sector expects to see some of these issues percolate up in integrated resource plans,” she said, adding that a renewable buildout could put some people back to work.

In the MISO footprint, load dipped by about 11% during the country’s strongest lockdown measures. Now, Schug said load is currently trending about 5% below weather-adjusted norms.

Murray said his clients are experiencing different load recoveries. For instance, he said steel companies, automobile manufacturing and oil and gas production have been significantly dragged down. Other manufacturers are less affected.

Further waivers of MISO Tariff requirements might still be necessary, Griffin said. MISO has so far put together a waiver of load modifying resource registration deadlines for the capacity auction and a 60-day grace period on the June 25 deadline to demonstrate exclusive land use for some generation projects in the interconnection queue. (See MISO Dr a fts COVID-19 Waiver for LMRs.)

“We’d like MISO to remain flexible,” he said.

June 19, 2020

MISO Board Addresses Racism, Social Unrest

MISO made a rare foray into addressing political and social events Thursday when its CEO and board members condemned systemic racism and vowed to listen to minority employees in order to effect organizational change.

Board Chair Phyllis Currie said directors and executives had engaged in “considerable discussion” in a closed session about the “long-term disparate treatment of African Americans by the police and in the workforce.”

“These issues impact our employees, so in turn, they impact MISO,” Currie said during the virtual board meeting.

“Obviously, racism and prejudice still exist, and we need to eradicate them in all their forms,” Director Baljit Dail said.

“Obviously, we’ve all been shocked into realizing there’s so much more to do,” added Director Barbara Krumsiek. She said the board will be more open to adopting actions to assist MISO employees and go further in promoting diversity.

The board’s comments come about three weeks after Minneapolis resident George Floyd was killed while in police custody, galvanizing racial justice protests that have reverberated around the world.

A boarded-up storefront in downtown Indianapolis following protests on May 31. MISO’s headquarters are located in nearby Carmel, Ind. | © *RTO Insider*

During the meeting, Director Mark Johnson reflected on a recent blog post his daughter wrote on experiencing racism.

“Being an African American parent, you try to insulate them from the racism. But it’s unavoidable that anything you try to do, they will experience it,” Johnson said.

“It’s a community in pain right now,” CEO John Bear said of African Americans. Bear said MISO has recently instituted all-hands meetings discussing systemic racism and historical inequalities. He also said the RTO’s leaders plan to embark on “listening tours” inside the company.

Bear also lauded the U.S. Supreme Court’s recent dec i sion granting protected class status to gay and transgender employees.

“I am proud of the diversity on our board and in our senior leadership. … But I think we can take that much further,” Bear said.

“This is not a flash; this is something we will press on,” he promised.

June 19, 2020

FERC Announces Tech Conferences on Carbon, OSW

FERC on Wednesday announced it will hold two technical conferences later this year: one to examine carbon pricing in the wholesale electricity markets and another to consider its transmission policies in relation to the growth of offshore wind.

The first conference, to be held Sept. 30 and led by the commissioners themselves, is in response to a petition and subsequent supportive comments earlier this year from a diverse array of stakeholders, including independent power producers, environmentalists and renewable energy trade associations. (See IPPs, Renewable Groups Seek F E RC Carbon Pricing Conference.)

“When such a broad group of voices asks the commission to convene an exchange of ideas, I think it is important that we do so,” Chairman Neil Chatterjee said during the commission’s monthly open meeting Thursday.

The main topic will be whether FERC even has the legal authority to regulate prices on carbon in regions with commission-jurisdictional markets, Chatterjee told reporters during a teleconference after the meeting. He noted that the petitioners merely asked FERC to “start the conversation” and not for the commission to create a specific rule. “I’m not going to prejudge where the conversation will lead , but I do think it’s significant we’re having this conversation,” he said.

The announcement was celebrated by the groups that submitted the original petition, including the Electric Power Supply Association, American Council on Renewable Energy and R Street Institute.

“Very happy to see this and appreciate FERC’s leadership in convening this conversation,” tw e eted Jeff Dennis, general counsel for Advanced Energy Economy and a former commission staffer. “I led the development of a few of these conferences in my time and recognize that they are not simple endeavors and require a great deal of staff and commissioner time.”

However, Justin Gundlach, a senior attorney for the New York University School of Law’s Institute for Policy Integrity, warned stakeholders not to “get too excited,” not i ng that the commission’s language in its announcement meant that the conference “is not going to be about RTOs or other federal entities adopting a carbon price.”

“The purpose of this conference is to discuss considerations related to state adoption of mechanisms to price carbon dioxide emissions, commonly referred to as ‘carbon pricing,’ in regions with commission-jurisdictional organized wholesale electricity markets,” FERC said (AD 2 0-14).

“I didn’t have a role in the drafting of the press release issued yesterday, but [Gundlach’s interpretation] wasn’t my understanding,” Commissioner Richard Glick told RTO Insider. A FERC spokesperson noted that the commission is still working on a detailed agenda for the conference.

The second conference announced Wednesday will be held Oct. 27 and will be led by staff. Participants will “discuss whether existing commission transmission, interconnection and merchant transmission facility frameworks in RTOs/ISOs can accommodate anticipated growth in offshore wind generation in an efficient and effective manner that safeguards open-access transmission principles” and “consider possible changes or improvements to the current framework should they be needed to accommodate such growth” (AD20-1 8).

Asked by reporters what prompted this conference, Chatterjee said that “the time is ripe to start a dialogue” given the expected growth of offshore wind resources. There are about 26 GW worth of projects going through the federal permitting process, and states have collectively established procurement targets of more than 28 GW, acc o rding to the American Wind Energy Association.

Chatterjee was also asked whether the conference will address concerns that offshore wind will be priced out of PJM’s capacity market because of the commission’s expansion of the RTO’s minimum offer price rule. He did not directly answer the question, noting that the commission was still working on an agenda but stressed, as he has “time and time again,” that the commission’s “efforts to protect markets are fuel-neutral.”

June 17, 2020

PG&E Pleads Guilty to 84 Homicides and Arson

Pacific Gas and Electric Corp. CEO Bill Johnson stood before a judge in Chico, Calif., Tuesday and replied “guilty, your honor,” 84 times to charges of involuntary manslaughter as he watched photographs of those who died in the 2018 Camp Fire display on a courtroom screen.

One of largest corporate homicide cases in U.S. history is scheduled to conclude Friday, when Butte County Superior Court Judge Michael Deems sentences PG&E on the manslaughter charges and one count of starting an illegal fire. The November 2018 Camp Fire was the deadliest and most destructive wildfire in state history.

A plea deal calls for PG&E to pay the maximum fine of nearly $4 million. It is already on probation for six felony counts stemming from the San Bruno gas pipeline explosion in September 2010.

The company also plans to pay $13.5 billion to victims of the Camp Fire and a series of Northern California fires in October 2017 when it exits bankruptcy, probably within the next two weeks. (See Lawyers Close PG&E Bankruptcy Case.)

PG&E guilty — PG&E CEO Bill Johnson, standing, pleads guilty to 85 felonies in Butte County Superior Court on Tuesday, with the courtoom closed to most because of COVID-19. | *Butte County Superior Court*

Those who lost family members and homes in the fire will have Wednesday, Thursday and part of Friday to address the court prior to sentencing.

Johnson expressed remorse on behalf of PG&E Tuesday and vowed the company would change.

“Our equipment started the fire that destroyed the towns of Paradise and Concow and severely burned Magalia and other parts of Butte County,” Johnson told the judge. “That fire took the lives of 85 people. Thousands lost their homes and businesses, and many others were forced to evacuate under horrific circumstances. I wish there were some way to take back what happened or take away the pain of those who’ve suffered. But I know there’s not.”

Prosecutors said one of the 85 who died committed suicide as flames approached, but they lacked evidence to prove he killed himself to avoid being killed by the fire.

Butte County District Attorney Michael Ramsey released a re p ort Tuesday listing the names and ages of the dead. They included 99-year-old Rose Farrell, who was found on her front porch in Paradise near her empty wheelchair. Five others who died were women in their 90s; a dozen other victims were in their 80s.

Matilde Heffern, 68, her daughter Christina Heffern, 40, and granddaughter, Ishka Heffern, 20, died together in their home as it burned.

“Their remains were located commingled in the bathtub of their residence,” the prosecutor’s report said. “The Hefferns placed a 911 call as the fire approached their home. Somehow the phone line remained open as the house, and the three women, burned as helpless [emergency] dispatchers listened to their screams.”

Others perished in their vehicles, overcome by smoke and flames, as they tried to flee. A firefighter was “horribly burned” helping his fellow firefighters escape to safety, the district attorney said.

Ramsey said the cause of so much suffering and death was a 100-year-old broken C hook on a PG&E transmission line. The part cost less than a dollar when it was manufactured in 1919 and sells for about $13 today, he said.

“That is what killed 84 Butte County citizens,” Ramsey said, holding up the broken hook at a press conference following the arraignment.

‘Negligent and Reckless’

The report by Ramsey’s office examined in detail the decades of inspection and maintenance failures by PG&E that led to the C hook breaking. The report relied on investigations by the California Department of Forestry and Fire Protection (Cal Fire), the FBI and PG&E testimony before a grand jury.

The company skimped on inspections and upgrades for years to cut costs and boost profits, the report said. In 2013 it formed a committee to “explore opportunities to reduce costs by reducing the frequency of inspections and patrols” and gave bonuses to transmission line superintendents and supervisors based partly on staying under budgets, it said.

“As expected, the result of these reductions was less thorough and less complete inspections and patrols,” the report said.

The lax inspections and poor maintenance compounded problems on PG&E’s aging infrastructure, including the century-old Caribou-Palermo line, where the Camp Fire started.

“The fact that PG&E relied on a … 100-year-old C hook it knew nothing about to hold an energized 115-kV conductor is, by itself, negligent and reckless,” the report said.

PG&E likely knew the hardware was aging because sometime in the past its crews had replaced worn hanger plates on the line’s transmission towers, and a 1986 inspection of a similarly aged PG&E line had found worn C hooks, it said.

The Caribou-Palermo line was built between 1919 and 1921 by the Great Western Power Co., which PG&E bought in 1930. The line, now shut down, connected hydroelectric stations in the steep Feather River Canyon to population centers in the San Francisco Bay area. It crossed rugged foothills where winds gusted to more than 50 mph.

“Despite the fact that PG&E has owned … the Caribou-Palermo line since 1930, the evidence established PG&E did not catalogue or replace the original conductors, insulators or attachment hardware on many of the towers,” the report said.

In December 2012, five towers on the line collapsed, and a sixth was badly damaged in a domino effect that likely started when one tower’s “stub angles,” which connected the tower to its base, broke due to high winds and wet, icy ground, a PG&E engineer concluded. The engineer recommended inspections on other towers, but PG&E didn’t follow through, the report said.

“Again, this is consistent with PG&E’s practice of not following up on clearly established potential safety and/or maintenance issues,” it said.

The conductor on the Caribou-Palermo line was aluminum reinforced with a steel core, which has a lifespan of 36 years and carries a high risk of failure, according to a report by Quanta Technologies, a consultant PG&E hired in 2009 to assess its transmission system.

“What it says is that PG&E fully intended to run that conductor to failure,” the prosecutors’ report concluded. “A reasonable person doesn’t need an electrical engineer or Quanta Technologies to tell him that failure of an energized 115-kV [line] is extremely dangerous. PG&E’s decision to leave the 97-year-old aluminum, steel-reinforced conductor in service was extraordinarily reckless.”

“In essence, in 1930, PG&E blindly bought a used car. PG&E drove that car until it fell apart,” starting the Camp Fire, the report said.

June 17, 2020

FERC OKs Revised Forecast for PJM Incremental Auction

FERC granted PJM permission to use a lower peak load forecast for its second Incremental Auction scheduled for July, reflecting the impact of the COVID-19 pandemic (ER20 –1870).

On May 20, PJM reque s ted a one-time Tariff waiver to replace the summer peak load forecast it had filed earlier this year before states started issuing stay-at-home orders.

PJM stated that because it has already held the Base Residual Auction (BRA) and first Incremental Auction for the 2021/22 delivery year, capacity commitment levels, clearing prices and zonal capacity prices were already largely set for the year. PJM said the waiver would primarily affect parties newly releasing or taking on capacity commitments in the second Incremental Auction and was necessary because of “the impact of the unforeseeable economic consequences of the COVID-19 pandemic.”

PJM Incremental Auction — Estimated impact of COVID-19 on daily peak and energy | *PJM*

Without a change, its summer 2021 load forecast would be “significantly overstated,” PJM said.

“While the lack of record evidence is not dispositive, under the circumstances presented here, we find that any potential harm to prices in the second Incremental Auction for the 2021/22 delivery year is outweighed by using auction parameters that reflect the significant economic forecast change and associated decrease in the forecast summer peak resulting from the economic consequences of the COVID-19 pandemic,” FERC said in its June 15 order approving the waiver.

PJM forecasters have up d ated stakeholders on COVID-19 impacts for several months, saying weekday load peaks have come in 10.4% less, or around 9,300 MW, than what would be anticipated without COVID-19. At the May 12 Planning Committee meeting, PJM told members new parameters were being used for the forecast. (See “Load Forecast Update,” PJM PC/TE A C Briefs: May 12, 2020.)

The new parameters incorporate an updated economic forecast PJM received from Moody’s Analytics in April.

PJM said the April report’s forecast for third-quarter 2021 real gross domestic product is 7.1% lower than that assumed in Moody’s September 2019 forecast and that the drop, along with the “associated significant” decrease in forecast peak load, was “too large to ignore.” It said the waiver would “align the auction parameters with currently expected conditions.”

June 17, 2020January 29, 2024

UPDATED: FERC Sets Tri-State’s Exit-fee Rules for Hearing

[Editor’s Note: This article has been updated to clarify state-federal jurisdictional issues raised in this docket.]

In the face of opposition from Colorado officials and others, FERC last week set hearing and settlement judge procedures on Tri-State Generation & Transmission’s proposal for computing member exit fees (ER20-1559).

FERC accepted the contract termination payment (CTP) methodology for filing with a refund effective date of June 13, saying it raises issues of material fact that cannot be resolved based on the existing record and has not been shown to be just and reasonable.

In doing so, FERC’s June 12 order rejected a request by 14 Colorado legislators to decline jurisdiction, saying the commission’s consideration of Tri-State’s proposed exit-fee methodology “is consistent with our past practice.”

The Colorado legislators asked FERC to decline jurisdiction “to allow” the Colorado Public Utilities Commission to continue its consideration of complaints by United Power and LaPlata Electric Association asking the PUC to set a just and reasonable fee for their exit from Tri-State.

The PUC held a hearing on the complaints in May, and an administrative law judge’s decision is expected by next week. Before the hearing, the ALJ granted the complainants motion to reject Tri-State’s defense that the PUC lacked jurisdiction (19F-0620E, 19F-0621E).

‘All Requirements’ Contracts

The commission in March accepted Tri-State’s request that it be recognized as jurisdictional to the commission (EL20-16). (See “Ruling Permits Tri-State to Become FERC Jurisdictional,” SPP FERC Briefs: Week of March 16, 2020.) Tri-State’s 43 utility members in Colorado, Nebraska, New Mexico and Wyoming signed all-requirements wholesale service contracts obligating them to purchase at least 95% of their requirements at cost-based rates through 2050.

Tri-State’s proposed CTP methodology is designed to calculate the payment an electric distribution cooperative or public power district must make to terminate its contract. The cooperative said its determination of exit fees on a case-by-case basis has led to disputes “with and among” members and that the proposed methodology was overwhelmingly approved by its members in April.

The CTP methodology uses a mark-to-market analysis incorporating demand and energy charges to ensure remaining members are financially unaffected by withdrawals and Tri-State can continue to fund its operations and debt service.

The Colorado PUC protested CTP, saying a similar methodology resulted in an initial exit charge for members Kit Carson Electric Cooperative and Delta-Montrose Electric Association that was 70% higher than the amount on which Tri-State settled. On June 9, the commission approved Delta-Montrose’s withdrawal, allowing the cooperative to exit Tri-State as planned on June 30 (EC20-51). (See Tri-State G&T, Delta-Montrose Reach Withdrawal Deal.)

Northwest Rural Public Power District argued that the methodology was improperly based on projected revenues and calculates payment over an excessively long time period, benefiting non-withdrawing members.

Wheat Belt Public Power District contended the methodology violates the cost-causation principle by socializing among all utility members some costs to provide wholesale electric service to members in Colorado and New Mexico.

Tri-State CEO Duane Highley called the commission’s acceptance of the filing “a decidedly positive outcome” and an “important step forward” for its members.

“Each [member] now has a voice and will be treated equally on wholesale contract and rate matters,” Highley said. “We believe this issue is now properly before the appropriate regulatory commission.”

‘Civil Conspiracy’

United in May also filed a lawsuit against Tri-State and the three non-utility members in a Colorado county district court, claiming a “civil conspiracy” to deprive state regulators of jurisdiction over Tri-State’s exit fees. United said it plans to seek punitive damages after suffering “hundreds of millions of dollars in damages.”

Tri-State responded with a lengthy statement, saying United’s complaint “smacks of desperation and is completely without merit.”

“Tri-State will vigorously defend its members and its board of directors’ lawful, appropriate and open decisions and actions to seek federal regulation. Further, United Power’s complaint insults our other cooperative members, who clearly understood the direction of the association,” Tri-State said.

Tri-State and the other three entities have until Friday to file a response, in what could be another protracted legal proceeding.

June 17, 2020

GreenHat Maneuvers to Remove FERC from Shell Case

GreenHat Energy has filed a motion to bar FERC’s Office of Enforcement from working on a breach-of-contract case involving Shell Energy North America, alleging commission officials conspired with an independent consultant hired by the PJM Board of Managers to change the report on GreenHat’s 2018 default.

In its June 4 filing, GreenHat alleges that in March 2019, it learned that one or more members of Enforcement’s investigative team had met with Robert Anderson, an independent third-party expert retained by PJM’s board to prepare the Report of the Independent Consultants on the GreenHat Default. The filing further alleges that FERC officials had a draft copy of the report and asked Anderson to “alter or remove language in the draft favorable to GreenHat.”

The company said that in early July 2019, it received an anonymous whistleblower letter alleging that a representative of Enforcement asked the team conducting the default review to “avoid including any information that could be exculpatory to GreenHat.”

“Enforcement’s unsavory conduct over a year ago may be out of the commission’s hands at this point. But walling off Enforcement and others who worked on the investigation is not,” GreenHat wrote in its filing.

FERC and Anderson declined to comment on the GreenHat filing. Officials from PJM said the filing was still being reviewed by the RTO.

The motion comes after a May 29 petition by Shell asking FERC to intercede in a Texas state court case in which GreenHat filed a breach-of-contract claim against the energy company regarding bilateral contracts to transfer financial transmission rights. Shell is asking the commission to interpret PJM’s Tariff provisions regarding bilateral transfers of FTRs (EL20-49).

GreenHat Energy — GreenHat’s significant growth in exposure and MTA loss | *PJM*

Shell said in its petition that GreenHat does not allege the FTR agreements were breached but instead “makes the extraordinary claim that entering data into PJM’s platform for reporting FTR transfers created additional separate, binding contracts, which Shell Energy allegedly breached.”

Shell entered into three agreements with GreenHat between August 2016 and February 2017 in which it agreed to what it called a “consignment” arrangement in which GreenHat would transfer FTRs to Shell, which would attempt to sell them in the next PJM long-term FTR auction.

GreenHat transferred the FTRs to Shell and reported the transfer in PJM’s FTR center without any compensation.

Shell agreed to pay GreenHat 73% of the revenues it generated from FTRs that sold in the auction. Shell agreed to return to GreenHat any FTRs that failed to clear or to purchase them at “an agreed-upon price, also based on auction clearing prices.”

Shell said it fulfilled its obligations under the first two bilateral agreements on Oct. 18, 2016, and Feb. 10, 2017, by making one-time lump-sum payments to GreenHat of the final purchase price for cleared FTRs and those uncleared FTRs that it did not return to GreenHat.

The company executed the third agreement on Feb. 27, 2017. In the meantime, FTR trader DC Energy told PJM in February 2017 that it believed “GreenHat’s portfolio would lose between $35 [million] and $40 million by the time the positions settled in two to three years.” (See Shell Demands Seat at GreenHat Settlement Table.)

In a June 1 notice, FERC set a June 29 deadline for comments in the proceeding. The deadline for comments was later changed to July 14 after FERC granted GreenHat’s motion for extension on June 11.

June 17, 2020

NYISO Stakeholders OK Peak Forecast Tweak

NYISO’s Management Committee voted Tuesday to revis e the ISO’s Tariff to address a concern regarding the peak load forecast and minimum unforced capacity requirements for load-serving entities.

The forecast is determined using the New York Control Area’s (NYCA) highest actual hourly load in the prior calendar year adjusted to “design conditions,” which are expected to occur on a non-holiday weekday in July or August.

NYISO Associate Planning Analyst Ying Guo said the ISO was concerned about situations in which the highest hourly actual load occurs outside the “design conditions” as in 2019, when the highest actual load occurred on a Saturday in July.

The minimum capacity requirement is allocated among individual LSEs, determined by their consumption during the highest hourly actual load in the NYCA, regardless of whether that is consistent with consumption at design conditions.

The Tariff revision would require the use of the highest NYCA load hour occurring on a non-holiday weekday during July or August when calculating the NYCA peak load forecast. About 80% of the highest coincident NYCA peak load hours have occurred in July and August.

The change will ensure that each LSE’s share of the minimum capacity requirement is consistent with the design conditions used to calculate the minimum capacity requirement.

If the highest load hour occurs on a weekend or holiday, it would be adjusted to account for expected additional load that would have occurred if the highest load hour had been a non-holiday weekday. Similarly, load also would be adjusted when the highest load hour occurs outside July and August.

If the temperature is higher than the design temperature, load will be removed to reflect the expected lower load that would have occurred if the highest load hour had taken place at the “design” temperature. The ISO said the change should ensure that the incentive to reduce peak demand aligns with when the peak demand is expected to occur.

Following board approval, the changes are expected to be filed with FERC in July, with the ISO seeking an effective date in time for the 2021/22 capability year.

Dave Clarke of the Long Island Power Authority said the change “makes some sense in the short run” but asked whether the rules would need to change again if increasing solar generation transitioned the ISO into a winter-peaking region.

“If we shift to a … winter-peaking system, this wouldn’t be appropriate,” agreed Nate Gilbraith, NYISO resource adequacy and ICAP specialist. “In 10 years or so, if we need to make this change again, we will and that will be made with a whole suite of things we’d need to accommodate a winter-peaking system.”

Gilbraith said the change approved by stakeholders Tuesday “doesn’t have any administrative or coordination challenges.” But he said a project considering moving from a one-hour peak calculation to one involving five or 10 peak hours would be more complicated. “That’s why that’s a project — bigger scope,” he said.

June 17, 2020

Xcel Energy Completes $400M Tx Project

Xcel Energy subsidiary Southwestern Public Service has completed a major transmission project in Texas and New Mexico, part of a multibillion effort to expand and modernize the region’s grid.

The $400 million, three-year project came in 9% under budget and involved the construction of 240 miles of 345-kV transmission lines from SPS’ TUCO substation north of Abernathy, Texas, to the China Draw substation southeast of Carlsbad, N.M.

Xcel Energy transmission — Crews erect an H-frame structure as part of work on the TUCO-China Draw transmission line. | *Xcel Energy*

The TUCO-China Draw project is part of Xcel’s Power for the Plains initiative, designed to update the region’s grid to improve reliability, meet demand and provide new renewable energy outlets. SPS’ network comprises more than 7,000 miles of high-voltage lines that cover the Panhandle and South Plains regions in Texas, portions of eastern and southeastern New Mexico, and also reach into the Oklahoma Panhandle and southwestern Kansas.

Xcel said much of the initiative’s work has focused on strengthening its connections with SPP, enabling it to tap abundant and economical sources of electricity that have lowered purchased power costs by as much as $60 million annually. The investments have quadrupled Xcel’s import capabilities and boosted the region’s power supply during peak demand months, the company said.

“Xcel Energy is committing a large amount of capital as a sign of our faith in the economies of eastern New Mexico and West Texas,” said David Hudson, president of Xcel’s New Mexico and Texas operations. “We are focusing resources on projects that will not only provide our communities the safe, clean, abundant and affordable power they require for development but also keep the cost of electricity at or below the rate of inflation. The Power for the Plains transmission enhancement program is a foundational aspect of that strategy.”

The region’s energy and agriculture economies are expected to expand in the coming years, though the crash in oil prices has dampened some of those projections.

Xcel said it has invested more than $3 billion in grid and power generating improvements in Texas and New Mexico since 2011. That includes an expansion of wind resources that puts the company on track for an 80% reduction in carbon emissions by 2030.